The trade war offers us an opening
ponents, which are sourced from suppliers all over the world. Over the past three decades, production of these technologies started moving to China, and many of the key suppliers became closely interconnected. It is not easy to disentangle operations from China’s highdensity integrated-circuit ecosystem.
But it is easier than it would have been if Western companies hadn’t feared that China would steal their intellectual property as it has been doing in its efforts to become an innovation powerhouse by 2020 — a focus of China’s 13th Five Year National Plan on Scientific and Technological and Innovation.
In 2015, according to Seamus Grimes of National University of Ireland and Yutao Sun of Dalian University of China, the supply chain for Apple’s products consisted of 198 global companies, with 759 subsidiaries, located in 16 countries. The research, detailed in their forthcoming book, China and Global Value Chains, found that 32.7% of these suppliers were Japanese, 28.5% American, 19.0% Taiwanese, 6.5% European, and only 3.95% Chinese. Of the 391 subsidiaries providing highest-value “core components”, 40.4% were American, 26.8% Japanese, 10.7% Taiwanese, 9.2% Korean, and only 2.2% Chinese.
To put it simply, more than half of the components of Apple’s products are imported into China, and practically none of the important core technologies are made by Chinese companies. Nearly all of the intellectual property in Apple’s products originates from outside China. The researchers found that the few subsidiaries that foreign companies located in China that were producing core components were largely involved in the production and testing of products for just-in-time delivery to locations for final assembly.
It doesn’t make sense for the US to move manufacturing to India. But there is a $100 billion market that Indian IT companies don’t seem to comprehend, despite my repeated efforts to educate them: to help America bring manufacturing back home. Indian IT can design new, America-based value chains and factories; install and program robots; and monitor manufacturing operations in the same way that large data centres are remotely managed. Then, instead of vilifying Indians for taking American jobs away, Donald Trump will laud Indian IT for helping make American great again.
Vivek Wadhwa is a Distinguished Fellow at Carnegie Mellon University at Silicon Valley and author of Driver in the Driverless Car, how our technology choices will create the future. The views expressed are personal